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Last Chance for CARES Act Special Retirement Plan Distribution Rules

Last Chance for CARES Act Special Retirement Plan Distribution Rules

2020 has been a year full of surprises and COVID-19 has presented many with unexpected financial challenges.

Pulling funds from your retirement plan is never a light decision to make, but the CARES Act, enacted on March 27, 2020, provided for special distribution options for retirement plans and IRAs. A coronavirus-related distribution is a distribution that is made from an eligible retirement plan to a qualified individual from January 1, 2020 to December 30, 2020, up to an aggregate limit of $100,000 from all plans and IRAs.


Qualified individuals must meet one of the following criteria:

  1. Have been diagnosed with the virus
  2. Have a spouse or dependent diagnosed with the virus
  3. Experienced adverse financial consequences as a result of being quarantined, being furloughed or laid off, or having reduced work hours due to COVID-19
  4. Experienced adverse financial consequences as a result of being unable to work due to a lack of childcare due to COVID-19
  5. Experienced adverse financial consequences as a result of closing or reducing hours of a business you own or operate due to COVID-19

With a coronavirus-related distribution, the 10% early distribution penalty does not apply. These distributions can be repaid within the three-year period, beginning on the date after the distribution is made, in one or more installment payments.

Unlike a traditional hardship distribution, you have the option to repay some or all of the coronavirus-related distribution over that same three-year period.

The CARES Act allowed all eligible retirement plans to establish coronavirus-related distributions, but employers had the option to not put them in place. So check with your employer before requesting a distribution to see if they are available.

This unique option is only available until December 30th, so if you are in need, that deadline is quickly approaching.


All information herein has been prepared solely for informational purposes only and opinions are subject to change. Past performance is not indicative of future results and all investments involve the risk of loss of principal. For information on how these general principles apply to your situation, consult an investment professional.

© 2020 SVA Financial Group

Article Topic Specialist: Keith Kuzera, AIF®

Keith is a Wealth Manager with SVA Wealth Management, LLC.

With more than nine years in the financial industry, Keith provides comprehensive financial planning to his clients as well as asset management, investment analysis, and social security planning. He also conducts educational meetings for participants in qualified retirement plans.

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